Our pension insurance goes through the evolution from the model of pay-as-you-go to social pooling combined with individual accounts.

In order to investigate the impact of different financing pattern of old age insurance on savings,we use an overlapping generations model with two-period lives and find out that pay-as-you-go system diminishes savings,meanwhile,funded scheme increases savings.

The paper introduces the reformation and current situation of old-age social insurance in china, and then analyzes the effect of pay-as-you-go pension plan upon human capital investment, saving and economic growth using an overlapping model with an endogenous variable of human capital investment based on the urban-rural separation of old-age social insurance.

By a comparison between pay-as-you-go system and full funding system,it is concluded that full funding system is better for making a full use of "Population Dividen".